Stock exchange hitch

Stock exchange hitch

Shares in one of three state-run companies set to list on Cambodia’s twice-delayed stock exchange, due to launch in July, might not be traded until the end of 2011, with an official mooting the idea of a “soft launch” to the new bourse.
The comments, made by the director general of Telecom Cambodia today, came as the underwriter in charge of its initial public offering warned of a possible “few months” in bourse delays.

The Cambodia Securities Exchange (CSX) is set to launch this July “at any cost”, according to the government.

Officials contacted by The Post today said that date was still in place.

Telecom Cambodia has been confirmed as one of three companies to be listed.

It is set to float shares worth 15 percent of its overall asset value of about US$102 million, under the government’s requirements.

But while TC director general Lao Saroeun said the company was following the government’s guidelines and was “on progress”, he believed more time was needed to issue tradable shares.

“We need at least three months after the launch or until year-end to be ready for trading,” he said.

“I think the government will probably do a ‘soft launch’ first.

“We have a lot of work to do – such as choosing an independent accounting firm and law firms to evaluate our performance.”

Tong Yang Securities (Cambodia) Plc is one of seven underwriters licensed to operate.

It is preparing IPOs for two state-owned enterprises, Telecom Cambodia and Phnom Penh Water Supply Authority.

A third and as yet unconfirmed state company is also due to list.

But the managing director of Tong Yang has highlighted timing issues, stating that an IPO could take between six to nine months to complete.

“So far as the timeline for CSX launching is concerned, I would say it is possible to be somewhat delayed,” wrote Han Kyung Tae, who believes that it isn’t right to be “too obsessed” with deadlines.

“Since all the relevant parties are working very hard to launch the new market as soon as possible, the possible delay of a couple of months won’t be a big problem," he said.

While government officials remain convinced the exchange will begin on time, director general of Cambodia Securities and Exchange Commission (SECC) Ming Bankosal hinted that the CSX may have a two-stage launch.

“Of course, we will be on time. The IPOs will be ready for the bourse because we have two kinds of markets—firstly it can be at primary market and then it goes to secondary market.”

A primary market deals with the issuance of new securities. A secondary market is where issuances can be bought or sold.

“I think that at the middle of the year we can have primary market for the IPO and one or two weeks later [shares] can be traded in the bourse,” he said.

Meanwhile, the chairman of underwriter Phnom Penh Securities, which is an underwriter being assisted technically by China and Taiwan, highlighted the potential importance of launching on time.

“The government should launch on deadline. We want to show that we have this market paving the way for securities firms to push progress,” said Kuy Vat.

Diong King Kuang, chief executive officer of OSK Indochina Securities limited, another underwriter in Cambodia which actively exploring listing options with corporations, remained “confident that the relevant authorities can meet the July dateline for its first IPO”.

The long-term future of the stock market is also being considered by those on which a successful launch hinges.

Han Kyung Tae said that a more important matter was “how well the market is prepared”.

“We are at the starting-line of a long race of the capital market development and I believe it is far different from a 100-metre sprint,” he said.

“We are laying down the foundation for the future of Cambodia's capital market. What we should focus on is to set up a good market practice and a competitive investment environment for both domestic and foreign investors, as well as issuing companies. In this way, CSX will become a competitive market in the region and even become the regional financial hub in the future.”

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